European butadiene market strong thanks to US shale gas
Feedstock for polymer resins typically not derived from natural gas
Despite waning local demand, European butadiene markets remain strong thanks to overseas export demand, according to GBI Research. Increased U.S. use of shale gas as an energy source is leading to a shortage of locally produced petrochemicals, boding well for the European butadiene market.
Butadiene downstream segments include polybutadiene, ABS and SBR sectors. It’s used to make synthetic rubbers and polymer resins and widely used to produce SBR, for manufacture of automobile tires, adhesives, sealants, coatings and other rubber articles.
GBI Research says the disparity between butadiene production and demand will climb in the near future as the U.S. moves away from crude oil and naphtha to the increasingly cheap natural gas. The percentage of C4 hydrocarbons required for butadiene production is very low in natural gas compared to crude oil or naphtha. As a result, growing demand will necessarily require a boost in imports.
U.S. butadiene demand last year stood at 1.9 million tons — comparable to the 1.6 million tons the country produced. GBI Research predicts demand will hit 2.4 million tons by 2020, while butadiene yield will climb at a slower rate, reaching 1.9 million tons by the end of the decade.
The next four years in particular are expected to be relatively bleak in terms of butadiene production growth, but a number of on-purpose technologies now in development are then expected to contribute to overall production — although it will take some time for these to emerge as a viable alternative supply option.
Last year the U.S. imported 329,118 tons of butadiene, with Canada, South Korea, Netherlands, China, the UK and Germany the leading suppliers. GBI Research expects rising demand to see this figure reach 524,916 tons by 2020.
The new report states that the Middle East has upcoming downstream plants to produce Styrene Butadiene Rubber and Acrylonitrile Butadiene Styrene, which promise to encourage the butadiene industry in the region.
In 2000, Europe and the Middle East’s butadiene demand stood at 2,037,749 tons, before increasing to 2,575,670 tons in 2011. This demand is expected to grow at a Compound Annual Growth Rate (CAGR) of 4.9 percent between 2011 and 2020, to reach 3,173,838 tons in 2020.
Europe’s demand has historically overshadowed that of the Middle East, and this trend is expected to continue in the future.